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Stocks and Shares/Transcript
Transcript Text reads: The Mysteries of Life with Tim and Moby Moby is selling lemonade from a stand in his front yard. A sign on the front of the stand reads: Lemonade, Twenty-five Cents. Moby is smiling and drinking a glass of lemonade. The lemonade pitcher is nearly empty, and the money jar is completely empty. Tim walks up to him. TIM: Um, what happened to the lemonade? MOBY: Beep. TIM: Okay, but how do you expect to make money selling this stuff if you… MOBY: Beep. Moby holds up a hand to signal Tim should stop. Then he hands Tim a sheet of paper. Tim reads from a typed letter. TIM: Dear Tim and Moby, my parents are always talking about stocks. What are they? From, Eldridge. Well, stock is the money that's raised by a corporation that sells shares of itself to the public. A person who owns stock is called a shareholder or investor. MOBY: Beep. TIM: Oh. Okay, okay. Let's back up. Incorporating, or forming a corporation, is one way to organize a business. Almost all the large businesses that you know are corporations. Images show examples of corporate emblems. Text on the emblems includes: Fizzy Pop Soda, Bigcorp, Robot Chow, and Megacom. TIM: But small businesses can be corporations, too. An animation shows a city block of small businesses. Names of the businesses include: Cassie's Salon, Bob's Plumbing, and Rita's Café. TIM: When you invest in a corporation, you buy shares of its stock. You trade your money for a piece of the company. An animation shows a pie chart. A slice of it represents a percentage of a company's stock. The slice is labeled: Tim's share. TIM: So, owning a share means that you, as an investor, share in the money the company makes or loses, and in the things it buys. If the company's doing well, making more money than it spends, investors' shares of the company become more valuable. An animation shows three smiling corporate executives and a growing stack of currency. TIM: If it's doing badly, and the company doesn't make as much money as it spends, the investors' shares become less valuable. The stack of money begins to shrink, and the three corporate executives become sad. TIM: As a shareholder, you also own a percentage of the company's assets, things that it buys, like factories and computers, and even other companies! MOBY: Beep. TIM: Well, that's the funny thing about the stock market: that's the place where you buy and sell shares of different companies. An image shows the New York Stock Exchange building. TIM: The price of a stock is ultimately determined by what investors are willing to pay for shares of each company. An animation shows a balance scale with a share of stock on one side and cash on the other. Cash is added until the scale becomes balanced. TIM: And what the investors will pay depends on how much money they think the company will make in the future. MOBY: Beep. TIM: Well, it takes a lot of research and knowledge to predict when a company will grow. An image shows a woman with newspapers and a desktop computer, doing research on stocks. TIM: When people make big money in the stock market, it's often because they buy shares in a company when the shares don't cost much. This is usually when the company is new or not making much money. An animation represents a stock purchase for a very low price. TIM: If that company grows or makes some more money, the same share that was worth pennies becomes worth a lot more. A second animation represents the later purchase of the same stock at a much higher price. MOBY: Beep. TIM: Right. Buy low, sell high! MOBY: Beep. TIM: You take a risk by investing in a company. It might pay off in the end, and it might not. An animated graph represents the prices of two stocks changing over time. The value of one goes up, and the value of the other goes down. MOBY: Beep. TIM: Well, some investments are definitely less risky than others. A high-risk investment, like an Internet startup, has the potential for making you a lot of money, or losing you a lot of money. An animation shows an expanding bubble with a dollar sign on it. The bubble gets large and pops. TIM: Buying stock in a company that's been around for a long time is a safer investment. The downside is that the established company has already grown, so you probably won't see a major change in your investment. An animation shows a large factory with other buildings cropping up around it, representing how established companies grow. MOBY: Beep. TIM: Will I invest in your lemonade business? Moby nods. TIM: Well, it doesn't seem like you've actually sold any, so I'm going to go ahead and say no. MOBY: Beep. TIM: Well, never mind profit; just to break even, you'd have to sell that last glass for, like, 10 dollars. Moby continues to sell lemonade, but the sign on the front of his stand is changed to read: Lemonade, 15 Dollars. Category:BrainPOP Transcripts Category:BrainPOP Social Studies Transcripts